Question

A loan of $48,000 is made at 7% interest, compounded annually. After how many years will the amount due reach $121,000 or more?

Answer 1

Compound interest formulaAccumulated sum= P(1+r)^twhere P=present valuer=interest per periodt=number of periods
Given
P=48000
i=7% per year
accumulated sum = 121
Need to find t

Apply compound interest formula
121000=48000(1.07)^n
Divide by 48000, and take log on both sides
n*log(1.07)=log(121000/48000)
n=log(121000/48000)/log(1.07)
=13.666 years

Ans. it will take 13.7 years the initial deposit will reach 121000